HACKENSACK, N.J. — Of all the confusing and expensive things about buying a house or refinancing a mortgage — and there are plenty — title insurance just might take the prize.

"A lot of customers don't understand title insurance," said Samuel Ingram, president and CEO of Myclosingspace.com, a company that offers title insurance and other house-closing services. "It's the largest component of your closing costs, and yet people don't know anything about it."

They should start learning about it, because title insurance, which protects homeowners' property-ownership rights, is drawing scrutiny from state regulators around the nation and other critics. They charge that:

● Title insurance prices — and profits — have unfairly soared, because they're based on house prices, which skyrocketed from 2000 to 2005. "The real estate boom has been very profitable for title insurers," said J. Robert Hunter, director of insurance for the Consumer Federation of America.

● Some title-insurance agents pay kickbacks to real estate agents, lawyers, builders and lenders to get home buyers' business, and those kickbacks inflate the price paid by buyers. Some of these charges were detailed in a recent report by Washington state's insurance commissioner, and others by the U.S. Government Accountability Office.

● Consumers have not benefited as technology has made public records more accessible, thereby lowering the cost of title searches.

● Real estate brokers and lenders are increasingly becoming owners of title agencies, creating potential conflicts of interest, according to the GAO.

The American Land Title Association defends the $17 billion industry.

"The fact that there are abuses is not a reason to damn a whole industry," said Carl Samson, president of the affiliated New Jersey Land Title Association and president of the New Jersey Title Insurance Co. in Parsippany.

Samson said his company, which is an insurance underwriter, monitors its agents to try to prevent illegal rebates or kickbacks to lawyers or real estate agents.

"As an industry, we do a pretty good job of self-regulating, but we have 75 agents in New Jersey, and other companies have more," he said. "It's not so easy to know if one of them is doing something illegal."

Title-insurance protection

As an example of how title insurance can protect a homeowner, the national association offers this story: A buyer purchases a home from a widow and her daughter. But then a child from the deceased man's first marriage turns up, claiming he is the rightful heir to at least part-ownership of the property. In such a case, the title insurance would kick in to pay off the missing heir's claim and preserve the buyer's ownership of the house.

Another example would be a lien on the property resulting from unpaid taxes or an unpaid contractor's bill. Occasionally, fraud turns up — for example, a man who owns the house with his estranged wife sells it without her knowledge or consent.

Usually these problems are cleared up during the title search. Industry experts say only about 4 percent to 6 percent of title-insurance premiums are paid out to satisfy claims. But that's much lower than the 70 percent-plus rate typical of other lines of property/casualty insurance.

Samson argues that it's not fair to compare title insurance to other lines, because it's not just insurance, it's also the title search and the title agent's efforts to make sure the seller clears up any problems before the closing.

When they buy title insurance, which is required by mortgage lenders, most buyers just pick the company recommended by their real estate agent or lawyer.

Several Web sites have sprung up, offering to help buyers find the best deal on title insurance. But in some states, comparison-shopping for the insurance offers little payoff, because title-insurance rates are set by a state agency.

An average rate is $5.25 per $1,000 on the first $100,000 of the mortgage, then $4 per $1,000 on amounts from $101,000 to $500,000. Title insurance related to a mortgage refinancing is cheaper than that for a house purchase.

Insurance cost soars

Because the cost of title insurance is based on house prices, it has risen sharply since 2000, even though the title companies' costs have apparently not risen, according to the GAO. (To view a PDF of the GAO's April 2006 report on title insurance, visit www.gao.gov/ new.items/d06568.pdf)

Advocates of comparison shopping say that although the cost of the insurance itself does not vary, different companies charge different amounts for other services, including the title search and copying and sending documents. So, they argue, a home buyer or owner can save hundreds of dollars by shopping around.